Xero and Intuit QuickBooks Online are two of the top-ranked online accounting solutions targeted at small businesses. As a relative newcomer (founded in 2006 in New Zealand), Xero has caused quite a stir among the accounting community, attracting a lot of positive attention for introducing fresh and innovative approaches.
As the established market leader, QuickBooks Online also continues to have a strong base of users and a cadre of staunch supporters.
Xero and QuickBooks each provides the essential accounting features and functions needed by a small business—accounts receivable and payable, expense tracking, invoicing and billing, banking data, reconciliation, audit trails, general ledger, and reporting.
While users of each solution were generally satisfied, they had nits to pick with Xero and QuickBooks Online. One user, for example, found the ability to customize QuickBooks “a little limited.” Another user disliked QuickBooks’ customer summary screen and found its financial reporting standards “a little lax.” Another thought QuickBooks required “too much scrolling” and “too much data input.”
While many users have been smitten by Xero and are singing its praises, others have found it overhyped and inferior to QuickBooks Online in particular operations. One Xero user, for example, complained that, “Unfortunately there is not much of a search engine within Xero, so locating transactions can be a bit tiresome.” Another found a shortcoming in Xero’s lacking “the facility to produce remittance advices.”
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One user found Xero’s ability to deal with hierarchies and subcategories inferior to QuickBooks, and felt that QuickBooks was better at handling mundane tasks like the processing of checks and cash payments.
One area in which Xero has a clear edge is integration, and its open API is wowing users and winning converts. As one workflow system developer reported, integration of his solution with Xero was a snap, while integrating with QuickBooks was difficult and time-consuming.
Another winning feature of Xero is its automated bank feeds—its ability to automatically import bank statements from thousands of banks globally and to keep bank accounts, credit cards, PayPal transactions, and more up to date on a daily basis.
Xero’s ability to handle bank accounts in multiple currencies also has won users’ praises.
Reporting is an area in which QuickBooks appears to have an edge, including its ability to create what-if scenarios. As our reviewer noted, “QuickBooks Online has a huge number of reports on about everything you could imagine.”
While the monthly pricing of the base solutions is similar, QuickBooks Online limits the number of users to 1, 3, or 5 and charges extra for additional users. QuickBooks base pricing ranges from $12.95 to $24.95 to $39.95 per month, and with its $39.95 plan, five additional users can be added for $15 more per month, and 20 users for $35 more per month. QuickBooks also offers plans with payroll included at $51 and $63 per month.
Xero allows unlimited numbers of users for each of its plans ranging from $19 to $29 to $39 per month, with the plans differing in the functions provided. The low-end plan allows only five invoices and 20 bank statements per month, while the high-end plan includes multicurrency transactions. The middle plan allows unlimited invoices and bank reconciliations. Xero offers some basic payroll functions but requires integration with third-party solutions for more comprehensive payroll processes.
Bottom Line: Xero customers generally are thrilled with the innovative qualities the solution brings to the small business accounting arena, particularly its API, as well as the quality of support and the company’s responsiveness. QuickBooks Online also has a cadre of devoted fans and offers a powerful set features and capabilities at an attractive price point. They both offers free trials, so you can try them, compare, and choose the one you deem best for your needs and budget.